Analysis

December 2nd - November proved a rather rickety ride for the Dollar and yet, when really called upon to produce the goods on a dip following Thanksgiving, it did just that with the 90.75 base rim quickly restoring composure and pushing the US currency back into the 92’s. In this sense, the greenback cannot be faulted for its ongoing resilience and, while doing considerably better against the unloved Yen than, say the Pound or Canadian, the general flow is clearly still to the upside. Even so, some reassurance of that upside bias would certainly help after the recent rollercoaster and so the 92.6 resistance would be kept under close watch in the weeks running into year end. If that obstacle could be cast aside, the Dollar could hit 2006 under full steam and the 95.5 base projection and longer term Fibonacci retracement at 95.9 would then be very much in the crosshairs during the first quarter. Only if that pivotal 90.75 base platform actually gave way, thereby also severing the latest three-month stage of uptrending, would there be genuine signs of decaying momentum, turning attention back towards the broader uptrend in the 88’s.

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Strategy

A bull until proven otherwise, dips into the mid/low 91’s remain buying opportunities as long as stops are geared to the 90.75 defence. The Canadian is a beast unto itself but, from a relative price standpoint, perhaps the Aussie or Pound represent better sales than the Euro or Yen at this particular stage in the cycle of the Forex arena.

See subsequent updates of Currency Lab for further week to week analysis along with an upcoming long term overview of this and eight other key Forex pairings and the Dollar Index.

Disclaimer: Every effort has been made to ensure accuracy but no assurance can be offered by technical commentary currency lab, Mike Ellis or Forexnews.com against errors or ommissions and absolutely no liability will be accepted for any trading results based on the analysis and suggestions provided.